Single Audit is an organization-wide examination of an entity that receives funds (typically federal funds) over a period of time. The Single Audit provides assurance to a granting institution that funds awarded to entities, such as states, cities, universities, and non-profit organizations, are being managed and used according to applicable laws, regulations, contracts, and grant agreements.
Typically, the Single Audit is performed by an independent certified public accountant (CPA) and includes two main parts: an audit of the financial statements and a compliance audit of the entity's funding programs. The compliance audit of the funding programs includes (a) gaining an understanding of and testing internal controls over compliance and (b) testing compliance with applicable compliance requirements for major programs, and includes a planning stage and an examining stage. The compliance audit of award programs is integrated with the audit of the entity's financial statements.
A planning stage of the compliance audit of funding programs requires an auditor to familiarize himself/herself with the management and operation of the entity. Typically, the auditor identifies any funding awards received by the entity and determines whether there is a high or low risk that the entity does not comply with laws and regulations. As various funds are provided each year to different entities, each with their own style of management and operation, and as each awarded fund can include different laws and regulations relating to fund use by the entity, the structure of Single Audits tends to differ from one entity to another entity.
Accordingly, improved systems and techniques are needed to plan and perform audits that are based on qualities and characteristics of an entity in addition to rules and procedures associated with granted funds.